The functionally-accurate, cooperative (FA/C) distributed problem- solving paradigm is one approach for organizing distributed problem solving among homogeneous, cooperating agents. While several FA/C systems have been implemented, there has been little formal analysis of the quality of the solutions that can be produced using the approach or of the conditions that are necessary for the approach to be effective. This paper reports on work we have done to formally analyze the FA/C model in the context of distributed sensor interpretation (SI). Several results are presented that compare the quality of solutions produced by a distributed FA/C system to those produced by an equivalent centralized system. We first establish that while it is possible for an FA/C system to produce the same solution as a centralized system, this requires the use of interpretation and coordination strategies that are impractical for most SI applications. We then consider the effect of "approximate" interpretation and coordination strategies.